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After yesterday’s surge, oil prices have corrected downwards again this morning. Thus, Brent and WTI breached their first support. Along with the technical constellation, which still is slightly bearish, yesterday’s inventory data may show some effect now. Adding to the bearish potential has also been the euro, which already returned from its intraday high at 1.3390 USD, and the declining European stock markets. However, losses have remained limited so far.

Oil prices in London and New York bounced off their first support early on Wednesday and then started to trade up despite the fundamentally and technically bearish situation. Supported by the IEA’s monthly energy report, oil futures even breached their resistances at 862.75 USD (G.Oil), at 103.00 USD (Brent) and at 95.40 USD (WTI). Even if the report contained both bullish and bearish data, market participants seemed to have almost exclusively focused on the prospect of strongly rising refinery runs worldwide, which might cause some bottlenecks at the oil market in Q3. As for U.S. inventory data, the figures came out mainly bearish although this did not suffice to set off some profit-taking. This might have been due to the build in crude which was clearly below the API’s forecast released the night before. Thus, oil futures consolidated at a high level in the evening and closed with considerable gains.

ICE Gasoil contract for July delivery settled at 873.00 USD on Wednesday. This was 15.25 USD above Tuesday's settlement. With some 87,600 deals the traded volume was clearly above average.

Technical indicators are not giving off any fresh signals this morning. After selling signals had been triggered on Monday and Tuesday, the Stochastic’s bearish influence has decreased by now as its both lines are converging again. The RSI has moved in the overbought zone at the WTI chart, that is above the 70%-line, favouring technical profit-taking. If the indicators fell back below the 70%-line, a selling signal would be triggered. Until then, the RSI stays neutral. We consider the technical constellation neutral to slightly bearish as the bearish potential might not be completely used up yet.

U.S.

Nymex bearish: After oil futures closed surprisingly high Wednesday thanks to the IEA report, traders tend to take some profits this morning in view of declining Asian stock markets (Nikkei 225). The traded volume at NYMEX is clearly above average for this time of day. Market players are now closely watching the performance of European markets, new cues from forex trading and for some economic data to be released in the course of the day.

Houston (ex-wharf indications 12-06 )
380cst $585
180cst $646
MGO $961

New Orleans (ex-wharf indications 12-06)
380cst $590
180cst $638
MGO $962

Singapore (correct as of 1430hrs LT - delivered indications)

Crude is bouncing up slightly with +$0.10. The paper market is gaining bullish momentum with June 180cst +$6.25 and for 380cst +$5.05, and July contracts with 180cst +$4.15, 380st +$4.55. The cargo market is up as well with 180cst +$2.94, and 380cst -$2.61 and MGO -$0.28.

The Singapore fuel oil markets traded mixed ranging from -$3.0 to +$3.0 during the Asian Platts window yesterday. There is a strong interest in the 180 cst cargo market pushed up by several big trading houses which continued to rise compared to the 380 cst market. The delivered bunker premiums were around +$8.0 above cargoes prices. This morning both markets are trading down.

380cst $598
180cst $621
MGO $875

Fujairah (delivered indications 13-06)

380cst $611
180cst $693
MGO $1025

ARA (Amsterdam - Rotterdam - Antwerp)

Indications for delivered bunkers:
380cst : $583
(1.0 %) :$ 613
180cst: $ 612
(1.0 %):$ 640
MGO 0.1%S: $ 863